July 2, 2025
Teamtime/Depositphotos.com
Can City-Run Grocers Work For New York City?
Zohran Mamdani, the Democratic nominee for mayor of New York City, plans to open government-run grocery stores, if elected, to combat high food prices, again sparking a debate over whether cities should be running grocers.
In a campaign video, he described the stores as a “public option” like in health care and said they would “operate without a profit motive.” The stores would not pay rent or property taxes, potentially reducing overhead with the savings passed onto consumers. They would also buy and sell at wholesale prices, centralize warehousing and distribution, and partner with local neighborhoods on products and sourcing.
@zohran_k_mamdani #Grocery #prices are out of control. One in 4 kids in #NYC isn’t getting enough to eat. It’s unacceptable. Today I’m announcing a major new proposal to tackle price gouging and bring down costs: city-owned grocery stores. These stores will sell cheaper groceries because they won’t have to pay rent and property taxes, passing on those savings to shoppers. They will buy and sell at wholesale prices with the goal of lowering costs, not turning a profit. New York City already spends tens of millions of dollars in ineffective tax subsidies for corporate grocery stores to operate in neighborhoods with limited access to fresh food. Instead, we should use our public money for a public solution. When so many New Yorkers are struggling to get enough to eat, we need big solutions that will work. #nycmayor #bk #bronx #queens #manhattan #statenisland #inflation #costofliving #wholesale #foodtiktok #elections #politics ♬ City Life – Danail Draganov
Mamdani projects it will take a total of $60 million to launch one grocery store in each of New York City’s five boroughs. He has previously said he will redirect some of the $140 million in private grocery store tax breaks to finance the pilot program.
Mamdani’s Grocery Plan Draws Criticism
The city-run grocers are part of Mamdani’s broader plan to reduce the cost of living for New York City residents, with his other proposals including freezing rent on rent-stabilized apartments as well as free child care and bus services. The grocery stores also address food deserts — or areas, often in low-income communities, where residents have limited access to affordable and healthy food options.
Mamdani, a socialist candidate and current state assemblyman, told The Food & Environment Reporting Network, “New Yorkers have been failed by a market-only approach and there is a desperate need for a public option for produce.”
The city-grocery plan has drawn significant pushback, including protests from John Catsimatidis, the CEO of grocer Gristedes, and bodega owners questioning how they can compete against government-subsidized grocers.
A number of business owners expressed concerns to City Journal about corruption arising from such a program.
The major charge by critics is that even with the tax and rent breaks, a city-run grocer can’t price competitively against the national retailers that benefit from the economies of scale.
City-Run Grocers Have a Mixed Track Record
Often cited are the failures of city-run grocers in other cities. The Florida town of Baldwin Market closed its town-owned grocer in 2024 after low foot traffic made it impossible for the town to break even on its expenses, according to The Florida Times-Union. The city of Erie in Kansas in 2024 leased its town-run grocery store to an independent operator after losing money for four years.
In February of this year, the city of Chicago ditched its plans to open municipal-owned grocery stores, citing difficulties securing a qualified operator. Instead, it’s pursuing a public market, envisioning a space that provides basic groceries while supporting local farmers and small vendors.
Chicago’s move to open a city-run grocer came after Whole Foods closed a store in Chicago in 2022 after six years in operation, despite receiving $10 million in tax incentives.
Still, city-run grocers operate in two other Kansas towns, St. Paul and Caney. This year, the city of Madison in Wisconsin is opening a city-owned grocery store; and Atlanta is using tax dollars to open two grocery stores this year. In all cases, the communities couldn’t attract a private sector grocer to solve a food desert situation.
Atlanta’s mayor, Andre Dickens, said earlier this year on social media, “We’ve reached out to grocery chains and even offered incentives — no takers.”
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Gary Sankary
Retail Industry Strategy, Esri
Adam Dumey
Global VP - Retail, World Wide Technology
Neil Saunders
Managing Director, GlobalData
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Discussion Questions
Are government-owned and operated stores a worthwhile or feasible last-resort option to service a food desert area?
What else could legislators be doing, beyond tax breaks, to entice an independent grocer to open in a food desert?
Poll
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It is not the job of government to run public grocery stores. If there are grocery deserts or food distribution problems, then the government should help resolve the root causes, rather than starting a business of its own. There is also the issue of unfair competition against the private sector, as a state-run grocer could happily operate at a loss and bypass taxes and regulations that everyone else has to follow.
And as for prices being out of control, government caused that through loose monetary policy and turning on the printing presses. Government now claims to be the solution to a problem it created. As Ronald Reagan once said: the more the plans fail, the more the planners plan.
Also from Reagan – “The nine most terrifying words in the english language are – I’m from the government, and I’m here to help”. If any endeavor fits this quote perfectly, it’s the idea of government-run grocery stores.
Google is now paying $300 to $500 per hour for doing work online work from home. Last paycheck of me said that $20537 from this easy and simple job. Its amazing and earns are awesome. No boss, full time freedom and earnings are in front of you. This job is just awesome. Every person can makes income online with google easily….
.
More Details For Us→→→→ https://tinyurl.com/googlejob6
This is a fascinating collision between urban policy, retail economics, and social equity. Persistent food deserts indicate systematic market failures that traditional retail solutions haven’t solved – some markets are simply unprofitable at private sector hurdle rates. Instead of competing with retailers, NYC could redefine the local grocery landscape by making retail infrastructure a public utility.
Along broader platform strategies, the city could develop shared distribution centers, cold storage facilities, and last-mile logistics that private operators could leverage, similar to how airports provide terminals that airlines operate within. NYC’s comparative advantage isn’t in retail operations; it’s in infrastructure development and risk mitigation, which enable sustained private retail presence in challenging markets.
Hmm. reading the article it seems that the idea has heretofore been limited to Kansas, Florida – you know Red States – so…. But seriously, no I don’t think this will work: even if we could get beyond the unfair competion angle (no taxes, free rent) I see this as a quagmire of political problems, on everything from who would work there to what would be carried. The much talked about food desert issue is really one of transportation: most inner city neighborhoods are likely closer to a supermarket than rural or (even) suburban ones; what’s lacking is a way for the citizendry to access them. Finding a way to make public transit work better would seem more cost-effective.
Should any government run a grocery store? NO!
Can NYC run a grocery store? Not well.
Does NYC have an affordability problem? Yes.
Are city-run grocery stores the answer…not by a long shot.
Let’s start with the underlying problems. The city is short hundreds of thousands of housing units. Solve that problem, and housing overall affordability gets better..
Mamdani is proposing a lot of radical ideas that have the private sector—even the liberal private sector, if any of those folks are still around—up in arms.
City-run grocery stores would be a big mistake. But before we dismiss it as some off-the-wall, unprecedented socialist experiment, I’m reminded that here in the Midwest, we have the “munis”—city-run liquor stores. Different situation, of course—those exist because local laws prohibit private liquor sales—but the point is, there’s precedent. Still, running a grocery store versus a liquor store? That’s like comparing a lemonade stand to a full-service bar.
There are serious issues in the U.S. around food access, both urban and rural. And national chains have often made business decisions that ignore their role in the communities they serve.
I’ve spent time in the food co-op space, and one of the most promising movements is the rise of urban co-ops. These aren’t the co-ops of my generation—the organic, fragrance-free, Birkenstock-wearing crowd. Today’s urban co-ops are mission-driven and focused on bringing fresh food to inner-city markets. Their assortments look more like a Target than a Whole Foods. They even carry—clutch my pearls—Coke and Pepsi.
For Mamdani, I’d suggest this model is a better path: support and scale food co-ops in neighborhoods where residents can’t access fresh produce or dairy. The benefit? Stores run by people who understand the business and are committed to the mission.
The intent is admirable but the lack of understanding of the business is glaring. Attributing price increases in eggs should be attributed to supply chain disruptions from avian flu outbreaks that killed millions of hens, not grocer greed. Also, there is ample data to push back against the “price gouging” label. Groceries are one of the lowest margin businesses within the broad Retail segment. From an execution perspective, to expect NYC to (Day 1 and at the scale that is being discussed) command the retail expertise, supply chain management, and competitive procurement is unrealistic. A potential alternative approach could be creating “Grocery Access Zones” through public-private partnerships – offering targeted tax incentives, streamlined permitting, and infrastructure support to attract private grocers to underserved areas. This would address the food desert concern and would focus efforts before a much broader rollout (if successful).
I was in the grocery segment for 22 years of my career. It is a very low margin (even by retail standards) business. It has complexity of temperature by product type and high perishable shrink. The margin it makes most comes from slotting fees, bill backs and a host of back of house systems with vendors and distributors. The costs of credit card processing are almost numbing at the number of transactions going through the lanes. The government would not be able to execute this at any level in my opinion.
It seems as politicians are all afflicted with the Dunning-Kruger effect
The idea of serving food deserts and communities who need better food options is noble and needed. But a state-run store will end up being an insult to the communities they intend to serve.
Government opening and operating grocery stores would result in half-filled shelves, low-grade and spoiled produce, few fresh food choices, and poorly maintained store equipment. Few private sector vendors, wholesalers, and producers will want to partner with all that comes from government red-tape, sluggish processes, a lack of daily focus, and operational incompetency. It’s hard enough as it is now to operate a successful grocery store with ample profit.
Mr. Mamdani is good at saying stuff, but he has no clue about what it would take for a municipality to own and operate viable grocery stores in “food-desert” neighborhoods. If he understood the steep practical challenges, he would never propose such a thing.
A far more cogent conversation is possible, however, about policy changes and incentives that can bring business entities into those neighborhoods and help them be successful. I’m not just talking about lavish tax breaks or “enterprise zones”.
Imagine if instead the city acquired physical retail locations in designated neighborhoods and leased the space to capable retail operators. This would require oversight and security, but not operational skills that the city entirely lacks.
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It is not the job of government to run public grocery stores. If there are grocery deserts or food distribution problems, then the government should help resolve the root causes, rather than starting a business of its own. There is also the issue of unfair competition against the private sector, as a state-run grocer could happily operate at a loss and bypass taxes and regulations that everyone else has to follow.
And as for prices being out of control, government caused that through loose monetary policy and turning on the printing presses. Government now claims to be the solution to a problem it created. As Ronald Reagan once said: the more the plans fail, the more the planners plan.
Also from Reagan – “The nine most terrifying words in the english language are – I’m from the government, and I’m here to help”. If any endeavor fits this quote perfectly, it’s the idea of government-run grocery stores.
Google is now paying $300 to $500 per hour for doing work online work from home. Last paycheck of me said that $20537 from this easy and simple job. Its amazing and earns are awesome. No boss, full time freedom and earnings are in front of you. This job is just awesome. Every person can makes income online with google easily….
.
More Details For Us→→→→ https://tinyurl.com/googlejob6
This is a fascinating collision between urban policy, retail economics, and social equity. Persistent food deserts indicate systematic market failures that traditional retail solutions haven’t solved – some markets are simply unprofitable at private sector hurdle rates. Instead of competing with retailers, NYC could redefine the local grocery landscape by making retail infrastructure a public utility.
Along broader platform strategies, the city could develop shared distribution centers, cold storage facilities, and last-mile logistics that private operators could leverage, similar to how airports provide terminals that airlines operate within. NYC’s comparative advantage isn’t in retail operations; it’s in infrastructure development and risk mitigation, which enable sustained private retail presence in challenging markets.
Hmm. reading the article it seems that the idea has heretofore been limited to Kansas, Florida – you know Red States – so…. But seriously, no I don’t think this will work: even if we could get beyond the unfair competion angle (no taxes, free rent) I see this as a quagmire of political problems, on everything from who would work there to what would be carried. The much talked about food desert issue is really one of transportation: most inner city neighborhoods are likely closer to a supermarket than rural or (even) suburban ones; what’s lacking is a way for the citizendry to access them. Finding a way to make public transit work better would seem more cost-effective.
Should any government run a grocery store? NO!
Can NYC run a grocery store? Not well.
Does NYC have an affordability problem? Yes.
Are city-run grocery stores the answer…not by a long shot.
Let’s start with the underlying problems. The city is short hundreds of thousands of housing units. Solve that problem, and housing overall affordability gets better..
Mamdani is proposing a lot of radical ideas that have the private sector—even the liberal private sector, if any of those folks are still around—up in arms.
City-run grocery stores would be a big mistake. But before we dismiss it as some off-the-wall, unprecedented socialist experiment, I’m reminded that here in the Midwest, we have the “munis”—city-run liquor stores. Different situation, of course—those exist because local laws prohibit private liquor sales—but the point is, there’s precedent. Still, running a grocery store versus a liquor store? That’s like comparing a lemonade stand to a full-service bar.
There are serious issues in the U.S. around food access, both urban and rural. And national chains have often made business decisions that ignore their role in the communities they serve.
I’ve spent time in the food co-op space, and one of the most promising movements is the rise of urban co-ops. These aren’t the co-ops of my generation—the organic, fragrance-free, Birkenstock-wearing crowd. Today’s urban co-ops are mission-driven and focused on bringing fresh food to inner-city markets. Their assortments look more like a Target than a Whole Foods. They even carry—clutch my pearls—Coke and Pepsi.
For Mamdani, I’d suggest this model is a better path: support and scale food co-ops in neighborhoods where residents can’t access fresh produce or dairy. The benefit? Stores run by people who understand the business and are committed to the mission.
The intent is admirable but the lack of understanding of the business is glaring. Attributing price increases in eggs should be attributed to supply chain disruptions from avian flu outbreaks that killed millions of hens, not grocer greed. Also, there is ample data to push back against the “price gouging” label. Groceries are one of the lowest margin businesses within the broad Retail segment. From an execution perspective, to expect NYC to (Day 1 and at the scale that is being discussed) command the retail expertise, supply chain management, and competitive procurement is unrealistic. A potential alternative approach could be creating “Grocery Access Zones” through public-private partnerships – offering targeted tax incentives, streamlined permitting, and infrastructure support to attract private grocers to underserved areas. This would address the food desert concern and would focus efforts before a much broader rollout (if successful).
I was in the grocery segment for 22 years of my career. It is a very low margin (even by retail standards) business. It has complexity of temperature by product type and high perishable shrink. The margin it makes most comes from slotting fees, bill backs and a host of back of house systems with vendors and distributors. The costs of credit card processing are almost numbing at the number of transactions going through the lanes. The government would not be able to execute this at any level in my opinion.
It seems as politicians are all afflicted with the Dunning-Kruger effect
The idea of serving food deserts and communities who need better food options is noble and needed. But a state-run store will end up being an insult to the communities they intend to serve.
Government opening and operating grocery stores would result in half-filled shelves, low-grade and spoiled produce, few fresh food choices, and poorly maintained store equipment. Few private sector vendors, wholesalers, and producers will want to partner with all that comes from government red-tape, sluggish processes, a lack of daily focus, and operational incompetency. It’s hard enough as it is now to operate a successful grocery store with ample profit.
Mr. Mamdani is good at saying stuff, but he has no clue about what it would take for a municipality to own and operate viable grocery stores in “food-desert” neighborhoods. If he understood the steep practical challenges, he would never propose such a thing.
A far more cogent conversation is possible, however, about policy changes and incentives that can bring business entities into those neighborhoods and help them be successful. I’m not just talking about lavish tax breaks or “enterprise zones”.
Imagine if instead the city acquired physical retail locations in designated neighborhoods and leased the space to capable retail operators. This would require oversight and security, but not operational skills that the city entirely lacks.